Caught on Tape: Massive Arizona Sting Forced Reforms

Nearly two decades ago, corruption appeared to be a fixture of the Arizona legislature. A sting run by local law enforcement captured the worst of it on undercover tapes.

Freshman state representative Sue Laybe counted bribe cash on camera. Senate Majority whip Carolyn Walker said $10,000 would get her out of debt, but decided to demand $15,000 for her vote. Before taking his own cut of illicit money, three-term representative Bobby Raymond summed up the prevailing cynicism by telling an undercover agent, "There isn't an issue in this world I give a s___ about. … I do deals."

In all, the investigations that came to be known as AzScam forced the resignation of an astounding 10 percent of the state legislature in 1991 and led to seven convictions of lawmakers, including those of Laybe, Walker and Raymond for bribery. Nineteen years later, however, good government advocates and Arizona officials hold the state out as a beacon of reform, Arizona is one of three states that have enacted sweeping "clean elections" laws that are meant to limit the influence of money in politics.

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Arizona voters passed a package of clean-election reforms by a razor-thin margin in 1998. The purpose was to lessen the role of money, and its temptations, in the electoral process, and give more people the ability to run for office.

In Arizona, candidates who attract at least 220 five-dollar donations are eligible for public campaign funding. If they decide to accept the public funds, they have to pledge to forgo contributions from political action committees, businesses, corporations, political parties and labor unions. They're also limited in how much of their own money they can use to fund their campaigns. Candidates for the state legislature are capped at $640 in personal funds.

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The public money that qualifying candidates use to mount their campaigns is raised through a surcharge tacked on to civil penalties and criminal fines.

Candidates can opt out of the system and use their own money and outside donations, but most members now serving in the Arizona legislature, as many as 62 percent, decided to run using public funds.

"When you run as a clean elections candidate," said Todd Lang, executive director of the state's Clean Elections Commission, "you're basically taking the public's trust."

Officials who were around during the bad old days remember how it used to be.

Maricopa County Attorney Richard Romley, who prosecuted the corruption defendants back in 1991, says greed had overrun the state house.

"I think what had happened was Arizona had not been minding the till very well," he told ABC News. "There was this feeling, you know, that I can get away with it a little bit."

In a 1991 interview with ABC News, state representative Jim Hartdegen, who was convicted of taking three times the legal amount of campaign contributions from an undercover agent, described the allure of money.

"Money is such an important thing to a campaign, especially to a person like myself who doesn't have that much wherewithal financially," he said.

Clean Elections in Maine, Connecticut

That is no longer quite as true, said David Lujan, now a state representative, who was a legislative staffer during AzScam. "They have done a pretty good job of restricting the amount of money special interests can spend down here," said Lujan.

One of the casualties, said Lujan, has been some of the free food and parties that are a staple of life in other state capitals. "There was a lot more of lobbyist entertainment-type things that happened [then] as compared to now."

Arizona was not the first state to enact clean elections reforms. Maine voters approved a clean elections measure by referendum in 1996 and it has remained popular ever since. As in Arizona, candidates can opt in or out of the system, choosing to accept public funding if they decline corporate and other donations. According to the Maine Clean Elections Commission, 80 percent of the members of the state legislature ran for office under the public financing option.

Maine freshman representative Alex Cornell du Houx told ABC News clean elections helped him think about voters, not fundraising. "It allows candidates and public officials to focus on better serving their community," said Cornell du Houx, "as they do not have so much time finding funds."

Connecticut is the latest state to adopt Maine and Arizona-style clean elections reforms. The state was moved to act by the prosecution and conviction of Gov. John Rowland, who went to federal prison in 2005 for having free work done on his home. The election reforms were passed the same year, and implemented in time for the 2008 election. According to Cheri Quickmire of the advocacy group Common Cause Connecticut, about 80 percent of state legislators now serving chose the public financing option.

"People who ran under both systems say it was a sea change in the legislature," she said.

None of the three states that have enacted clean elections reforms have seen a widespread corruption scandal among elected state officials in recent years.

Court Challenges to Clean Elections

But clean elections reforms have not been implemented without hiccups. New Jersey and Massachusetts, have implemented reforms only to roll them back. Voters in California rejected clean elections reforms, apparently recoiling at the idea of spending tax dollars on elections.

Critics have also attacked the clean elections law in court, and say the attempt at reform has merely created new ways to game the system.

A 2009 article in the Phoenix New Times weekly details how various politicians have abused the Arizona state system. Some would-be politicos have treated the public treasury as a private piggy bank, using public financing to pay for parties, frozen drink machines, and Segway ramps, while others have discovered that the public funding option can be used to double-team political foes at state expense.

In 2008, the Green Party was surprised to find an unfamiliar person running as a publicly funded Green candidate for a state seat. The candidate, apparently put forward by Republicans in order to undercut the incumbent Democratic candidate in a swing district, used public money to pay for conulsting and research from GOP firms, and drew enough votes to throw the election to the Republican.

The New Times article also details how the matching funds provision can be manipulated by allies running in multicandidate races. When a privately funded candidate outspends a publicly funded candidate, the publicly funded candidate is guaranteed enough money to keep pace. In 2008, in a race for a multi-seat state commission board, a Democrat spent hundreds of thousands of dollars of his money, knowing that a fellow Democrat would benefit by receiving matching funds.

The matching funds provision in the clean elections law has been successfully challenged in court. The provision has been knocked out of the Connecticut law, and is also under attack in Arizona. The U.S. Supreme Court is set to rule on matching funds this fall.

According to Lang, the real benefit of clean elections reforms is the access they offer to a broader range of candidates. "We have folks running without relying on those special interests," said Lang, "and I think it makes a difference to the average voter."

"They get to decide on your ideas, not your pocketbook."

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This is the final story in a week-long series of the Ross Investigative Unit's 2010 Carnegie Fellows, five student journalists who reported on the state of state legislatures for broadcast and web publication. This summer, the five reporters attended the annual convention of the National Conference of State Legislatures, which draws thousands of legislators, staffers and lobbyists.

Also this week on Brian Ross Investigates, watch a report on talks with the Taliban. "Brian Ross Investigates" airs every Friday on Hulu.com and ABC News Now, the network's 24-hour news channel available throughout the U.S. and Europe, at 1:36pm. Each show is also available on mobile devices, including the iPhone and iPad.